State looking to purchase former APM Terminals Virginia facility

Layne: Deal hinges on whether Alinda agrees to lease agreement that reverts property back to the state

PORTSMOUTH — Transportation and port officials are planning a pitch to buy the former APM Terminals container shipping facility from its new owners, according to the state's top transportation leader.

Aubrey L. Lane Jr., Virginia secretary of transportation, confirmed Thursday that state officials will be meeting in the coming weeks with Alinda Capital Partners Universities Superannuation Scheme Ltd. to discuss new lease arrangements in an effort to buy the nearly 7-year-old facility.

During a recent jobs announcement at the Newport News Continental plant, Gov. Terry McAuliffe said in an interview that Layne and Virginia Secretary of Commerce and Trade Maurice Jones were in contact with Alinda Capital officials about working out a new lease agreement that could place the shipping facility into the ownership of the state.

"I am a big believer in sit at the table, have negotiations, find out what's in their best interests and what's in our best interest," McAuliffe said. "But I don't want to get ahead of any negotiating."

Layne said now is the time to move on owning the facility, which has prompted state officials to reach out to the new owners.

"This gives us an opportunity to better align their needs and ours," Layne said. "Alinda is a financial buyer as opposed to APM, who is an operator of ports and is in the business. Alinda is supported by pension plans. So, they're looking at a long-term return on their money."

If state officials decide to enter into an agreement to purchase the former APM Terminals from Alinda, it could significantly increase the port authority's footprint and container capacity in Hampton Roads.

APM, a sister company of international shipping giant Maersk, is a subsidiary of the Danish firm A.P. Moller-Maersk Group. The company opened the $450 million, state-of-the-art deep-water marine container terminal in 2007, and began leasing the facility to the Virginia Port Authority in 2010. As with the state-owned terminals, VIT also now manages the APM facility.

New lease terms or a possible purchase agreement have not been determined, Layne said, as negotiations and discussions between the state and its new landlord are in their infancy.

Alinda officials could not be reached for comment Thursday afternoon.

This is not the first time state transportation and port officials have wrestled with purchasing the Portsmouth-based terminal facility on the Elizabeth River.

Prior to McAuliffe's administration taking office, Layne said, APM officials approached transportation members of former state Gov. Bob McDonnell about an immediate cash purchase of the facility.

While APM officials remain mum on its prior dealings with McDonnell's administration regarding the purchase of the terminal, Layne said that after being named state transportation secretary he soon learned that the unofficial asking price ranged from $700 to $800 million.

After McAuliffe was elected, Layne approached APM officials once again.

"I told them that if they wanted us to buy the terminal, make us an offer," Layne said. "We never got an official offer from them."

Alinda Capital closed on the purchase of the former APM Terminals Virginia facility last week for an undisclosed amount, said Erik Eisenburg, APM Terminals spokesman. The new owners also renamed the terminal: Virginia International Gateway.

McAuliffe and Layne have been openly critical of the port's nearly $1.2 billion, 20-year lease agreement with APM Terminals. Both called out current and former port authority board members earlier this year for what they called an expensive and economically reckless deal that continues to drag down the Port of Virginia's bottom line.

Despite seeing a surge in container traffic, and mounting interest from business prospects, the Port of Virginia continues to operate at a loss — albeit not nearly as large as first anticipated.

Officials with the Virginia Port Authority recently announced the agency operated at a $17.1 million loss in the 2014 fiscal year ending in June. That's roughly $6 million less than port officials projected earlier this year, but $1.6 million more than the $15.5 million loss recorded during fiscal year 2013.

But with new owners may come new opportunity that could reverse the course of the port's finances.

Layne said Alinda Capital, because of its history as an investments firm, may soon be looking for an "exit strategy for the asset" — possibly opening the door for the state to purchase the facility.

"That seems to line up better with the Commonwealth's goal of controlling that particular terminal long-term," Layne said. "We'll work with them to see if we can work an arrangement that will probably take the form of a long-term lease with a reversion to the Commonwealth of Virginia."